This week in new portfolio products, Russell Investments announced a new index family that reflects six investment disciplines in the U.S. large-cap equity class, then followed up three days later with the launch of a new category of six ETFs to match. Elsewhere in product news, Fidelity launched a global-income fund and other companies continued to see international as well as pure-play opportunities.
‘Investment Discipline’ Indexes
Russell Investments announced on May 16 the launch of a new index family that reflects six investment disciplines in the U.S. large-cap equity class. Each new Russell Investment Discipline Index reflects a particular approach to security selection practiced by investment managers. Each index is constructed independently of the others.
The full suite of Russell Investment Discipline Indexes includes:
- Russell U.S. Large Cap Aggressive Growth Index
- Russell U.S. Large Cap Consistent Growth Index
- Russell U.S. Large Cap Growth at a Reasonable Price (GARP) Index
- Russell U.S. Large Cap Equity Income Index
- Russell U.S. Large Cap Low P/E Index
- Russell U.S. Large Cap Contrarian Index
On Thursday, Russell followed that up with the U.S. launch of Russell ETFs, listing its first suite, the Russell Investment Discipline ETFs, on the NYSE Arca. The Russell Investment Discipline ETFs are designed to offer focused, transparent and consistent exposure to U.S. large-cap equities across six investment disciplines commonly practiced by professional investment managers.
The Russell Investment Discipline ETFs were created to help investors implement a position based on specific approaches commonly used by investment managers. The suite includes:
- Russell Aggressive Growth ETF (NYSE: AGRG)
- Russell Consistent Growth ETF (NYSE: CONG)
- Russell Growth at a Reasonable Price ETF (NYSE: GRPC)
- Russell Equity Income ETF (NYSE: EQIN)
- Russell Low P/E ETF (NYSE: LWPE)
- Russell Contrarian ETF (NYSE: CNTR)
Fidelity Launches Its First Global High-Income Fund
Fidelity Investments announced Wednesday the launch of the Fidelity Global High Income Fund. The new fund, Boston-based Fidelity’s first in the global high-yield category, allocates assets across four distinct markets: U.S. high yield, European high yield, Asian high yield and emerging markets debt. That enables investors to gain exposure to a rapidly growing area of global fixed-income markets. Over the past 10 years, income has comprised more than 90% of the total return of global high-income bonds as a group.
The fund will be lead managed by 15-year Fidelity veteran John H. Carlson. Carlson will work closely with regional portfolio managers located in markets around the world and supported by Fidelity’s extensive global fixedâ€income research team.
Global X Funds Launches Auto ETF (VROM) and Canada Preferred ETF (CNPF)
New York-based Global X Funds on Thursday launched the Global X Auto ETF (VROM), which offers investors diversified access to the global automobile industry. VROM has exposure of 74% to auto manufacturers and 26% to auto parts & equipment, as of May 10, 2011. Its 50 components are also broadly diversified geographically. The largest country exposures include: Germany at 23% of the fund, the U.S. 22%, Japan 22%, South Korea 11%, France 6%, China 5% and India 2%.
Global vehicle sales continue to rebound from the downturn. Purchases are predicted to reach a record high in 2011 (Scotia Capital, May 2011), dominated by rising purchasing power in emerging markets—such as China, now the world’s largest auto market—coupled with the U.S. auto industry revival (Scotia Capital, 2011). The ETF tracks the S-Network Global Automotive Index and has an expense ratio of 0.65%.
Also last week, Global X launched the Canada Preferred ETF (CNPF), which seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Canada Preferred Index. Its makeup is:
- Financials 73.15%
- Energy 10.43%
- Telecommunication services 6.47%
- Consumer discretionary 5.73%
- Consumer staples 2.45%
- Utilities 1.78%
The Solactive Canada Preferred Index tracks the performance of a select group of preferred stocks from Canadian issues that trade on the TSE. The underlying index is comprised of preferred shares that meet certain criteria relating to size, liquidity, issuer rating, maturity and other requirements as determined by Structured Solutions AG.
IndexIQ Launches IQ Hong Kong Small-Cap ETF
IndexIQlaunched its IQ Hong Kong Small Cap ETF (HKK) on Wednesday, the first ETF dedicated to providing access to Hong Kong’s dynamic small-cap sector. It seeks to replicate, before fees and expenses, the performance of the IQ Hong Kong Small Cap Index (IQSMHKK).
The market capitalization-weighted index is intended to give investors a means of tracking the overall performance of the small capitalization sector of publicly traded companies domiciled and primarily listed on the Hong Kong Stock Exchange, the world’s seventh largest stock exchange.
Hong Kongis currently the world’s 11th largest trading entity and in 2009, was the largest center of IPOs in the world, accounting for 22% of worldwide IPO capital raised that year. It recently was ranked second in the World Bank’s “Ease of Doing Business Index” and has had a top ranking by the Index of Economic Freedom for the last 15 consecutive years.
Gulfmena Launches Second Fund
Dubai-based Gulfmena announced May 16 the launch of the Gulfmena Access Fund. The Luxembourg-regulated fund will focus on capturing excess returns in MENA equity markets relative to the S&P Pan Arab Composite Index. The fund is actively managed and designed to fully capture the upside potential of these markets and their directional sector-specific moves.
It will be managed by Haissam Arabi and his team from Gulfmena Investments Ltd., a Dubai-based and DFSA-regulated asset management company that recently won Asian Investor’s 2011 Investment Performance Awards, Middle East Onshore Fund House. Arabi has previously managed a similar strategy with one of the longest and best-performing track records in the region.
Gulfmena also manages an absolute return fund. With the launch of this long-only relative value fund it can now cater to both alternative and traditional investors seeking access to the region.
Tiedemann Wealth Management Launches TWM Partners Fund
Tiedemann Wealth Managementannounced on Wednesday the launch of the TWM Partners Fund, L.P., a global portfolio investing mainly in third-party managers across a range of asset classes. It is designed for high-net-worth individuals and institutions.
“The TWM Partners Fund is a natural extension of our investment capabilities, allowing high-net-worth individuals, family offices and other qualified purchasers access to our best thinking through a limited partnership structure,” said Craig Smith, president of Tiedemann Wealth Management. “The fund also provides our partners, employees and their families the opportunity to more easily invest alongside our clients.”
Market Vectors MOO Tops $4 Billion AUM
Van Eck Global announced Thursday that its Market Vectors Agribusiness ETF (MOO) has exceeded $4 billion in AUM. MOO seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the DAXglobal Agribusiness Index, a modified market capitalization-weighted index designed to track the movements of securities of companies involved in the agriculture business that are traded on leading global exchanges.
As of March 31, 2011, the index contained 45 constituents from 16 countries. Equities of companies engaged in agricultural chemicals made up the largest subsector in the index, at 46.1%, followed by agriproduct operations and agricultural equipment, at 27.5% and 16.2%, respectively.
Knight Announces Astor Asset Management Crosses $1 Billion AUM
Knight Capital Group, Inc. (KCG)announced Thursday that subsidiary Astor Asset Management crossed $1 billion in assets under management.
Astor specializes in constructing portfolios by investing in exchange-traded funds based on a macroeconomic approach. Its actively managed portfolio of ETFs is designed with the goal of protecting and growing capital over time at an attractive absolute compounded return, without the performance fees and lockup periods of hedge funds. These portfolios of ETFs are offered through financial advisors within separately managed accounts and through a mutual fund, the Astor Long/Short ETF Fund (ASTIX; ASTRX; ASTZX).
Astor is also preparing to launch two new mutual funds based on investment strategies used in its separately managed accounts.
ETFS Silver Trust Sees Record Volume
ETF Securities USA LLC (ETFS) announced May 16 that share volume traded in the ETFS Silver Trust (SIVR) exceeded a record for the week of May 2nd, 2011. Shares reached a record 5.25 million traded on May 5th, 2011, with a value of $740 million traded for the whole week. Average daily volume in SIVR increased 18.5 times from $8m to $148m on the back of high volatility in the silver market.
SIVR began trading on the NYSE ARCA on July 24th, 2009 and offers exposure to silver at one of the lowest management fees (30bps) of any physically backed silver ETF in the U.S. market.
CAISfunds Forms Strategic Partnership with Fundspire
CAISfunds, a New York-based financial technology company providing an independent, alternatives investment platform to the wealth management community, announcedon Thursdaya strategic partnership with Fundspire, a leading provider of hedge fund analytics and portfolio management tools.
The Fundspire technology integration will add statistical analysis capabilities to the CAISfunds platform and allow advisors to analyze funds, optimize allocations, and construct client portfolios. It will also offer robust charting and report creation functions reflecting rolling statistics and correlations of a fund over varying investment periods.Fundspire provides a wide set of performance and risk metrics and market data for more than 1,500 indices covering global equity, fixed income, and hedge fund benchmarks.
RiverNorth Core Opportunity Fund (RNCOX) Closes to New Investors
RiverNorth Capital announced Wednesday that its flagship Core Opportunity Fund (RNCOX) will be closed to new investors as of July 1, 2011. Current investors may still purchase shares.
“At RiverNorth, we take fund capacity very seriously. Our decision to close the Core Opportunity Fund to new investors reflects our commitment to preventing a fund’s assets from exceeding a level where they would alter the fund’s investment strategy,” said Patrick Galley, president of RiverNorth Funds.
The RiverNorth Core Opportunity Fund (RNCOX) is an open-end mutual fund focused on closed-end fund investing. Launched on December 27, 2006, the fund offers diversification to multiple asset classes plus tactical allocation in a single investment. As of March 31, 2011, the fund has a 5-star rating from Morningstar and is in the top 1% for the 3-year period among 932 moderate allocation funds.